UK: Reviewing The Domestic Liability Limits for Passengers in China

On 16 December 2005, the National People’s Congress (‘NPC’) introduced two new procedures which allow individuals or organisations to request that the Standing Committee of the NPC reviews the legality of regulations or judicial explanations, which they feel oppose the Constitution or any of the higher laws in China.

Following the introduction of the new procedures, the Standing Committee received their first review request from relatives of several passengers who lost their lives in a domestic aviation disaster in November 2004. The request was for the Standing Committee to review the law which limits the liability of the aircraft in respect of domestic passenger carriage.

Currently, Order No. 132 passed by the State Council in 1993 provides that the passenger liability limit in China for domestic carriage is RMB70,000 (approx. US$8,700). The effect of this is that the maximum amount for which an air carrier can be found liable, even in instances where passenger death has occurred, is RMB70,000. However, Article 132 does provide that the liability limits can be broken if Article 25 type conduct can be established.

Article 128 of the Civil Aviation Law of the People’s Republic of China (‘Civil Aviation Law’) enacted in 1995 (and promulgated in 1996) states:

‘The limits of [the] carrier’s liability in domestic air transport shall be formulated by the competent civil aviation authority under the State Council and put in force after being approved by the State Council.’

This would indicate that the liability limits should have been reviewed and new limits drafted by the Civil Aviation Administration of China (‘CAAC’) and approved by the State Council, following the enactment of the Civil Aviation Law.

However, no new limits have been drafted by the CAAC and the Order No. 132 issued by the State Council in 1993 is still upheld as indicating the official domestic passenger liability limit.

China is a signatory to the Warsaw Convention (1929), the Warsaw Convention as amended by the Hague Protocol (1955) (‘Amended Warsaw Convention’) and also the Montreal Convention (1999), which became effective in China as of 31 July 2005.

Article 129(1) of the Civil Aviation Law provides that in respect of international carriage, the liability of the carrier to each passenger is limited to SDR16,600 (approx. US$24,300). Under the Montreal Convention, the cap on carrier liability to passengers is removed - carriers are now strictly liable for proven damages up to SDR100,000 (approx. US$146,000) and beyond that, carriers are only able to exclude liability if they can prove that the damage was not due to negligence or other wrongful act of the carrier (and its agents) or if the damage solely arose from the negligence or other wrongful act of a third party. Therefore, while the passenger liability limits in China for international carriage have been increasing over the years, no change has been made to the passenger liability limits in respect of domestic carriage in over ten years. Also, with the rapid growth of China’s aviation industry, it is hardly surprising that there is an increasing awareness that the domestic liability limits in China are not comparable with those of other countries in the region which tend to be more generously in keeping with international standards.

China has seen exponential growth in recent years and as is to be expected, living standards, especially in the major cities, have increased at a very considerable rate. As the calculation of the domestic liability limits stated in Order No. 132 was by reference to China’s economic situation in 1993, it is not surprising that the passengers or their next of kin will be dissatisfied if the carriers adhere strictly to the limits of RMB70,000.

There is a pressing need for a review of the liability limits for domestic air carriage and, in practice, the limits have already been tested and found wanting. In recent air carriage disasters in China, where loss of life occurred, the RMB70,000 liability limits as stated in Order No. 132, have been exceeded in settlements reached between the families and carriers.

However, ignoring the domestic limits should not be made a practice as there will be no uniformity in the way domestic liability limits are implemented in various circumstances. With the growing sentiment that the domestic liability limits are sorely overdue for review, and with China being increasingly under the international aviation spotlight, it is clear that a new set of regulations will assist in cementing the applicable system of limits and enhance China’s standing as a world class aviation player.

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